| A critical decision a firm makes in order to participate in an emerging industry is about the manner by which it will develop new product technology. A firm has the choice of developing product technology through internal R&D or through interfirm arrangements such as acquisition of other firms, joint ventures, minority equity ventures, non-equity ventures and licensing. Product technology in emerging industry is characterized by uncertainty, functional and physical compatibility concerns and variations in user attributes.;This research contends that characteristics of product technology place unique demands on the firm and influence the manner by which it acquires the product technology. Transaction cost economics, theories of technology development and competitive strategy are used to develop a conceptual framework that associates attributes of emerging technologies to the manner by which firms develop new products. The Intelligent Vehicle Highway Systems (IVHS/ITS) industry is the context for this longitudinal study. Contingency table analysis and logistic regression are the statistical methods used to test the hypotheses.;It is expected that uncertainty is likely to have a U-shaped relationship with internal R&D with fewer firms acquiring technology through internal R&D as uncertainty increases. However, when uncertainty is very large, internal R&D is likely to be the method of technology development preferred by firms. Internal R&D is likely to be favored when there are single functional standards while external arrangements are preferred in other regimes of functional standards. Greater physical compatibility requirements are expected to promote internal R&D. When users require specialized investments, firms are likely to develop the technology internally.;The study finds significant support for the hypotheses indicating that attributes of technology in an emerging industry influence the method of technology development used by firms in that industry. Implications for the trucking industry and global technology development are included in the study. The results emphasize the importance of understanding the attributes of a product's technology in order to successfully compete in an emerging industry. |
